Thai Home Economics Association defends Bank of Thailand independence
The Thai Home Economics Association (THEA) says it will soon issue a statement to defend the independence of the work of the Bank of Thailand after its conflicts with the government, the association chief said on Wednesday.
Nipon Poapongsakorn, THEA chairman and a distinguished fellow at the Thailand Development Research Institute (TDRI), said the THEA was gathering signatures of economists to back its official statement to be issued soon to defend the BOT’s independence from the government’s interference in the central bank’s monetary policies.
Nipon said the THEA’s statement would cite two main reasons the central bank had to be free from government influence.
First of all, Nipon said, the central bank must prevent its monetary measures from being abused to support short-term political measures, which could cause severe damage to economic stability in the long run.
Second, Nipon pointed out, the BOT could only achieve its inflation targets if the public, financial markets, capital markets, and exchange markets have confidence in the central bank, and that it would be determined not to allow interference for political gains.
Nipon said if the BOT lost such confidence, it could lead to a severe economic bubble like what was happening in Turkey.
Nipon said members of his association would also hold a seminar to brainstorm ideas to find a solution to the conflicts between the central bank and the government.
The THEA is the latest institution to back the independence of the BOT after Paetongtarn Shinawatra, leader of the ruling Pheu Thai Party, dropped a bombshell last Friday, saying the BOT was proving to be a hurdle against solving the country’s economic problems.
She faulted the central bank’s fiscal policy for the steady increase in public debt every year and thus forcing the government to set a deficit budget.
Since Pheu Thai became the leader of the ruling coalition, with Srettha Thavisin holding post of prime minister and finance minister, the government has been pressuring the BOT to lower its policy interest rate from 2.5% by 25 percentage points, to no avail.
The BOT’s Monetary Policy Committee has insisted that the current rate is appropriate for containing inflation within the target, while the government has argued that the inflation rate has been in the negative zone already.
